While Fed mem­bers are di­vided on the dan­gers of in­fla­tion, the ma­jor­ity are ex­pected to vote to leave rates at their his­tor­i­cally low tar­get range of 0.25-0.5 per­cent for one more month. “There would be no rea­son to po­ten­tially cre­ate noise around an elec­tion,” said David Stock­ton, a for­mer Fed re­search di­rec­tor now at the Peter­son In­sti­tute for In­ter­na­tional Eco­nom­ics.

By law, the Fed is in­su­lated from po­lit­i­cal pres­sures and its bud­get is not set by Congress. And an­a­lysts agree there is no sign elec­toral pol­i­tics are di­rectly in­flu­enc­ing the Fed’s think­ing.

The two-day FOMC meet­ing more likely will be fo­cused on set­ting mar­ket and in­vestor ex­pec­ta­tions for the fi­nal rate meet­ing of the year in De­cem­ber, Stock­ton told AFP.

“The state­ment fol­low­ing this meet­ing will prob­a­bly hint more strongly at a rate raise in De­cem­ber.”

The FOMC di­vi­sions-which spilled out into the open over the sum­mer, re­veal­ing a mi­nor­ity fa­vor­ing rate hikes sooner rather than later to head off in­fla­tion-showed it has faced tough de­ci­sions. So far in 2016, they have re­frained from act­ing in or­der to avoid in­ter­rupt­ing the mild eco­nomic re­cov­ery. Job cre­ation has been rel­a­tively strong. But wage growth has been slug­gish, so the job mar­ket has not pro­duced un­equiv­o­cal signs of in­fla­tion.

At the Septem­ber meet­ing, pol­i­cy­mak­ers said the de­ci­sion not to raise rates was a “close call.” Three of the 10 vot­ing mem­bers dis­sented and called for a rate hike. Since that meet­ing, US eco­nomic data has re­mained spotty. The econ­omy grew a ro­bust 2.9 per­cent in the third quar­ter, ac­cord­ing to the ini­tial re­port Fri­day, sub­ject to re­vi­sion. A re­spectable 156,000 jobs were added in Septem­ber, and the un­em­ploy­ment rate has re­mained steady at around 5 per­cent.

But in­fla­tion, as mea­sured by the Fed’s pre­ferred per­sonal con­sump­tion ex­pen­di­tures in­dex, slowed in the July-Septem­ber pe­riod to 1.4 per­cent from 2.0 per­cent in the prior quar­ter, which was the first time it had hit the Fed’s tar­get since early 2014. The Fed will have two more jobs re­ports-and a his­toric elec­tions re­sult to con­sider be­fore the De­cem­ber 13-14 meet­ing.

Brian Ja­cob­sen of Wells Fargo Funds agreed there is lit­tle ev­i­dence Fed de­ci­sion mak­ing has been dic­tated by the po­lit­i­cal cal­en­dar in re­cent mem­ory.

His re­search has found nearly a third of all rate hikes hap­pen in elec­tion years. In 1988, the Fed met a week be­fore elec­tion day and raised rates. Vice Pres­i­dent Ge­orge HW Bush went on to de­feat Mas­sachusetts gov­er­nor Michael Dukakis in a land­slide.

Nixon bul­lies Fed Chair Burns

“Most of the ev­i­dence sug­gests that ev­ery time the Fed has hiked, and even when it has eased, since 1978, it has been in re­sponse to the eco­nomic en­vi­ron­ment and not in re­sponse to the elec­tion cal­en­dar,” Ja­cob­sen told AFP. This is not to say the Fed has never been buf­feted by po­lit­i­cal winds. Richard Nixon bul­lied Fed Chair­man Arthur Burns into eas­ing mone­tary pol­icy ahead of the 1972 elec­tions. “Just kick ‘em in the rump a lit­tle,” Nixon told Burns as he urged him to pres­sure other FOMC mem­bers to lower rates in a recorded tele­phone con­ver­sa­tion.

Ge­orge HW Bush blamed Fed Chair­man Alan Greenspan for his fail­ure to win re­elec­tion in 1992, say­ing rates had not come down fast enough. Sarah Bin­der, se­nior fel­low at the Brook­ings In­sti­tu­tion, said the Fed’s in­de­pen­dence is tem­pered by its need to avoid po­lit­i­cal storms.

“Their life is not made any eas­ier by be­com­ing the tar­get of an­gry law­mak­ers,” Bin­der told AFP. “I think in re­al­ity the Fed needs po­lit­i­cal sup­port to make tough choices. Get­ting ag­gres­sively out of synch of po­lit­i­cal and pub­lic opin­ion, that’s a tough thing to do.” — AFP